Errold F. Moody

Errold F. Moody

Errold Moody

was the trustee of my mother's estate of approximately
$2.4M. He lied to beneficiaries, took trust money for
personal use, failed to keep receipts, caused the trust
excessive accounting fees, overpaid himself and used trust
money for legal fees to defend his breaches. The judge
ruled that

Errold Moody

overpaid himself by $82,000. He has
fled the state and is refusing to reimburse any money to
the family.

ERROLD F. MOODY, JR.

and

MATTHEW J. GONSALVES,

Respondents.

CASE NO.RP 09478054

[SECOND AMENDED PROPOSED] JUDGMENT

INTRODUCTION

This case presented the question of whether respondent

Errold F. Moody

, Jr., breached his fiduciary duties as
trustee of the Patricia L. Francis Trust during the period of
his trusteeship. For the reasons that follow, the Court finds
that he did and that he must make restitution to the trust in
the amount of $191,955.03 and to Mr. Shevick in the amount of
$95,899.41.

PROCEDURAL HISTORY

This case involved a trust established by the late Patricia
L. Francis. It is undisputed that Ms. Francis died on December
18, 2007, that petitioner David Shevick is decedent's son and a
beneficiary of her trust, and that respondent

Errold Moody

served as trustee from Ms. Francis' death
until he was suspended by the Court (Hon. Sandra K. Bean) on
April 13, 2011. Judge Bean ordered that an accounting be filed
by May 13, 2011, and ordered that all trust files be delivered
to the newly appointed temporary trustee, attorney Ruben
Sundeen. On June 14, 2011, Judge Bean removed

Errold Moody

as trustee and appointed Mr. Sundeen as
successor trustee.

Errold Moody

's second counsel, Matthew J. Gonsalves,
substituted out of the case on October 14, 2011, and

Errold Moody

began to represent himself. Two earlier
trial dates were scheduled and vacated, and on August 16, 2012,
the trial dates were scheduled and vacated, and on August 16,
2012, the Court (Hon. Cecilia Castellanos) set this case for
trial in Dept. 1 for December 14, 2012.

On October 22, 2012, the Court denied Gonsalves' for good
faith settlement determination. On December 14, 2012, the
Presiding Judge continued the trial to January 4, 2013, a date
agreed upon by the parties, so that a revised application for
good faith settlement determination could be heard by the (Hon.
Cecilia Castellanos) on December 19, 2012. On that date the
Court granted Gonsalves' motion for good faith settlement
determination (to which all parties stipulated), leaving
Shevick and

Errold Moody

as the remaining parties in this matter.

On January 4, 2013, this case was assigned to the Hon.
Steven Brick, Dept. 17 of this court, by Presiding Judge Clay,
as a three to four day probate hearing. Trial commenced on
January 4, 2013, continued on January 7, 2013, and then
recessed until January 14, 2013. The evidence was on January
17, 2013. Counsel offered their closing arguments on the
afternoon of January 18, 2013.

The matter was then submitted for decision, subject to
ruling on respondent's motion to disqualify the trial judge
pursuant to C.C.P. section 170.3, which was submitted just
before closing arguments. On February 28, 2013 the Honorable
Kelly V. Simmon's Marin County Superior Court, denied
respondent's motion to disqualify.

FINDINGS OF FACT ESTABLISHING LIABILITY
AND DAMAGES

The testimony at trial established that

Errold Moody

had been decedent's friend and paid
financial consultant for some 20 years at the time of her
death. Nonetheless, he claimed to have no knowledge of
decedent's many

When

Errold Moody

arrived at decedent's house shortly
after her death and began his work as trustee he made no
inventory of the furnishings of the house. He said he took
pictures of each of the rooms, but subsequently lost the
pictures. He began selling and giving away various items
but did not set up any system for keeping track of income
and expenses of the trust or what items had gone to whom.
He lost any receipts he may have obtained for the sale of
furnishings and furniture.

Errold Moody

was capable of using computers
(indeed, he testified to having owned several computers
which crashed during the period of his trusteeship), but
did not turn on Ms. Francis' computer to see whether she
had information which would have been helpful with his
administration of the trust (she did, in a Quicken program
that was easily accessible). Instead, he sold the computer
at a garage sale.

As trustee,

Errold Moody

made a habit of paying expenses with
cashiers' checks or cash. He did not keep the 'stubs' of
the cashiers checks.

Errold Moody

also acknowledged that he took for
himself a teak grandfather's clock from decedent's home
without the knowledge or permission of the beneficiaries.
He still has it. He also took some $5,000 of trust money
and used it to go to Florida for his own personal reasons.
He later returned the money to the trust.

Based upon information he says decedent told him over
the years before her death,

Errold Moody

distrusted petitioner and his sister
at the time of decedent's death (and earlier) and thought
them capable of taking trust property without permission.
In fact

Errold Moody

knows of no such property that was
taken. Petitioner asked for and received permission from

Errold Moody

to take some family photographs from
decedent's home on the day of the funeral. His sister,
Sarah, asked for and received permission to take two sets
of silver from decedent's home.

When, in December 2008, after a year of

Errold Moody

's managing the trust, petitioner
first asked

Errold Moody

what assets remained and how much he
had charged the estate,

Errold Moody

did not respond to that request for
information.

When, in March 2009, petitioner complained that his
prior request had gone unanswered, and asked for a full
accounting,

Errold Moody

insisted that petitioner make his
request through a lawyer, citing the 'privacy' of the
estate. Of course, the trust had no privacy interest vis a
vis a beneficiary.

When petitioner correctly pointed out that as a
beneficiary he had a right to the information he was asking
for,

Errold Moody

, nonetheless, insisted on petitioner
hiring a lawyer. When petitioner did hire a lawyer,

Errold Moody

hired his own lawyer and began
charging the legal fees he incurred to the trust.

In fact, in the spring of 2009,

Errold Moody

had not organized the decedent's files
and could not have provided a meaningful accounting.
Correspondence from the fall of 2008 through the fall of
2009 between

Errold Moody

and the CPA firm charged with filing
the trust's IRS form 706 showed that, contrary to

Errold Moody

's representations to the
beneficiaries, he had not provided to the CPAs the
documents they needed to complete and file form 706.
Indeed, despite having obtained a one year extension of
form 706 filing deadline.

Errold Moody

's delays in providing the required
documents to the CPAs caused the trust to incur IRS
penalties.

The fees

Errold Moody

charged the trust for his own time
were plainly excessive. In the accounting he claims that he
paid himself $33,330.79 for probate of the Oregon
condominium. A document produced by

Errold Moody

in discovery, '

Errold MOODY

RPD 003007, instead shows that his fee
for the probate was $37,330.97, which included $7,036.40
for the probate of the Oregon condominium, plus $30,294.57
as 1% of the value of the gross estate that he reported in
Oregon. Thus the amount of

Errold Moody

's fees, was misrepresented as
$101,623.97 when with the correct Oregon number added, it
was $105,624.17. Adding in the value of the Cadillac that

Errold Moody

also took for himself as a portion of
his trustee's fees, $4,000.00, brings

Errold Moody

's total trustee's fees to
$109,624.17.

Ruben Sundeen, Esq., the successor trustee, is the
founding partner of his law firm, specializes in trust and
estates litigation, and has been involved in more than 200
cases involving fee disputes. He testified that a
nonprofessional trustee such as

Errold Moody

would be allowed $40.00/hr. in Alameda
County, not the $250.00/hr. that

Errold Moody

charged to the trust. Mr. Sundeen also
testified that this amount would be capped at 1% of the
value of the administered estate, or up to 1.5% if the
estate was complex. Mr. Sundeen testified that the trust
was not complex, involving two residential properties and
approximately 25 investment and bank accounts.

Errold Moody

agreed with Mr. Sundeen's
characterization, and testified that it was his own inept
state of mind and disorganization that led to the
difficulty in producing an accounting. The value of the
estate administered by

Errold Moody

was $2,097,529.38. Thus the maximum 1%
fee should have been $20,975.94. The Oregon Probate fee of
$37, 330.97 was excessive. In trial

Errold Moody

refused to stipulate to the amount
listed as compensation for the Oregon condominium probate,
and instead testified that he spent about twenty hours on
that matter. Using the rate commonly allowed for
non-professional trustees in Alameda County, $40.00 an
hour, that leaves

Errold Moody

with a fee of $800.00 for the Oregon
probate. Although

Errold Moody

did not testify in detail as to the
extent of his work to sell the house in Riverside, he did
testify that he made several trips there, stayed at the
home, and helped to prepare it for sale. The Court will
allow $5,000.00 in fees for the sale of the Riverside
residence. An appropriate fee for

Errold Moody

's work in this matter was $26,775.94.
Subtracting this from the $109,624.17 that

Errold Moody

wrongfully took for his fees, he is
ordered to reimburse $82,848.23 to the trust.

In addition, he caused the trust to incur unnecessary
fees of his attorney, the CPA firm which worked on the tax
filings, the Mowat, Mackie CPA firm which created the final
accounting, and a bookkeeper who sought to organize the
trust records after

Errold Moody

had made a shambles of them. The
amounts of these excessive and unnecessary charges are
detailed below.

The form 706 CPA, through deposition testimony read out
in Court, stated that her firm's usual fee for preparing a
form 706 accounting for this size of estate would be less
than $15,000.00, and that because of

Errold Moody

's noncooperation and delays, the
final cost of the trust accounting was $40,500.00.

Errold Moody

is ordered to reimburse the trust
$25,500.00 for these excess fees.

Additionally, Mr. Sundeen testified that the final
accounting for the trust should have cost no more than
$15,000.00. In testimony and evidence presented to the
court,

Errold Moody

showed the same pattern of
disorganization and failure to timely provide documents to
the Mowat, Mackie accounting firm as he did with the CPA
that completed the IRS form 706 accounting. In December of
2012, more than three years after Ms. Francis' passing,

Errold Moody

still was missing seventeen categories
of account statements, including many bank statements. The
accounting took more than six months, and the Mowat, Mackie
firm charged $42,000.00 for the accounting. The excess
amount of $27,000.00 will be added to the amount that

Errold Moody

is ordered to pay to the trust.

Errold Moody

hired a bookkeeper to organize the
files, and he should have done that work himself. The total
paid to the bookkeeper was $8,435.80. The total accounting
and bookkeeping reimbursement to the trust for the two
accounting firms and for the bookkeeper is $60,935.80

When asked on adverse examination why he had done such a
poor job of managing the trust's assets and documenting his
work,

Errold Moody

explained that he had health problems
which made him incapable of fulfilling his duties. In his
words, he had a 'meltdown.' He again pointed to his health
issues as a reason for not responding to petitioner's
December 2008 request for information and for going to
Florida using trust money, and for disobeying the probate
court's order to turn over documents and complete the final
accounting in 2010.

Errold Moody

volunteered that he had similar health
problems in the late 1990s and had to struggle to
reestablish his business as a financial consultant because
he had pretty much destroyed it.

When asked on adverse examination why he had insisted
that petitioner make his requests for an accounting through
a lawyer,

Errold Moody

acknowledged that he wanted to hire a
lawyer to protect himself because of his negative
perception of petitioner and his sister, not based on
anything they had said or done after decedent's death, but
based on things decedent supposedly confided in him over
the years before her death.

In sum,

Errold Moody

acknowledged multiple breaches of his
duties as a fiduciary, by not properly administering the
assets of the trust, not keeping records of the disposition
of trust property, taking trust property for his own use,
causing the trust to incur unnecessary and unreasonable
professional expenses, overcharging the trust for his fees
and not responding to the reasonable requests for
information by petitioner, instead causing petitioner to
incur the expenses of his own attorneys' fees to pursue his
rights as a beneficiary.

Errold Moody

offered no legitimate excuse for his
behavior, which can only be viewed as malicious and
oppressive (which was proven by clear and convincing
evidence) within the meaning of Civil Code section 3294.

CONCLUSIONS OF LAW

The duty of loyalty, requiring a trustee to administer the
trust solely in the interest of the beneficiaries
(Â§ 16002, subd. (a)), is the most fundamental duty
of a trustee. (Bogert & Bogert, The Law of Trusts and
Trustees (rev. 2d ed. 1993) Â§ 543, p. 217 (Bogert);
2A Scott & Fratcher, The Law of Trusts (4th ed. 1987)
Â§ 170, p. 311.) Its purpose is to protect the best
interests of the beneficiaries. The duty of loyalty requires a
trustee to subordinate his or her interests to those of the
beneficiaries in every regard. (Bogert, supra,
Â§ 543, pp. 217-219.).

Errold Moody

's failure to take an inventory, taking of
trust property and cash, paying expenses with cash and
cashier's checks, misrepresenting facts to beneficiaries,
paying for his attorney from trust funds, forcing petitioner to
hire an attorney to seek an accounting, failure to work
competently with accountants, and other actions comprise
multiple and severe breaches of what was

Errold Moody

's foremost duty.

Errold Moody

violated several provisions of the
California Probate Code, including the following, evidenced by
the foregoing findings of fact:

P.C. Â§ 16000 (duty to follow the terms of the
trust and the law governing trusts);

P.C. Â§ 16002 (duty to administer the trust
solely for the benefit of the beneficiaries of the trust); P.C.
Â§ 16004 ( duty
to avoid transactions with the trust that will benefit the
trustee personally); P.C. Â§ 16006 (duty to
marshal trust assets and
take reasonable steps to preserve them);

P.C. Â§ 16009 ( duty to keep the assets of the trust
separate from the trustee's assets);

P.C. Â§ 16012 (duty to perform actions on behalf of the trust
rather than having others act on behalf of the trust);
and

P.C. Â§ 16040 (duty to manage other professionals
competently).

The court finds clear and convincing evidence that

Errold Moody

's mismanagement of the trust went beyond
ordinary breaches of trust into the realm of intentional malice
and oppression. Under Civil Code section 3294, malice means
conduct which is intended by the defendant to cause injury to
the plaintiff or despicable conduct which is carried on by the
defendant with a willful and conscious disregard of the rights
or safety of others.

Errold Moody

's taking of trust property and funds and
the teak grandfather clock, and failing to keep any records,
and in trial not only failing to take responsibility but trying
to blame Shevick and his sister were despicable and malicious.

Under Civil Code section 3294, oppression means despicable
conduct that subjects a person to cruel and unjust hardship in
conscious disregard of that person's rights.

Errold Moody

's conduct as described above was also
oppressive in that it put Shevick and all other beneficiaries
through years of delay, the stress and costs of litigation, and
reduction in the value of their mother's estate and their
inheritance, which were unjust hardships in conscious disregard
of their rights.

Based upon

Errold Moody

Errold Moody

testified that 'there is no money', and no
evidence was offered that

Errold Moody

has any substantial assets or net worth.
Based upon this lack of financial information, the Court
assesses the minimum punitive damages award of $1.00. This
amount does not diminish the seriousness of the Court's
finding.

Errold Moody

is also ordered to turn over the
grandfather clock to successor trustee Sundeen.

Probate Code Section 17211(b) provides that the trustee is
liable for a petitioner's legal fees if the court determines
that the trustee's opposition to a petition contesting the
account was without reasonable cause and in bad faith.
Petitioner did challenge

Errold Moody

's account, including the inept process by
which he failed to account for trust property, failed to keep
receipts, failed to track cash transactions, and caused
excessive accounting fees to create the final, deficient
accounting (which, for example, understated

Errold Moody

's fee by $8,000.00).

This Court concludes that

Errold Moody

did not have the capacity to function as a
competent trustee at all times pertinent to this matter. He was
asked several times to resign, did not, and continued to
overcharge the trust over $75,000.00 for his inept work. He ran
up excessive accounting fees through not gathering trust
account data and records, and not cooperating in good faith
with the accountants. Worse, he paid his attorneys from trust
funds to defend his indefensible actions. These were all bad
faith actions. At trial,

Errold Moody

and his attorney put forth no substantive
or successful defense, and with the one-sided documentary
evidence clearly and convincingly showing

Errold Moody

's many breaches of trust, and

Errold Moody

's own testimony, his opposition to
Shevick's petition was without reasonable cause.

Errold Moody

must reimburse Shevick for all reasonable
attorneys fees and costs in this case, reduced by the amount
that Shevick previously received from the settlement with
Gonsalves.

RESTITUTION

Respondent and his counsel did not address the amount of
damages or restitution Shevick claimed in this matter, except
that

Errold Moody

did stipulate to turn over the grandfather
clock and the Cadillac. With the amounts of restitution to the
trust essentially uncontested, the Court finds that judgment
should be entered against

Errold Moody

and in favor of Shevick, and that the
following amounts must be repaid by

Errold Moody

to the trust as restitution:

Excessive Accounting and Bookkeeping Fees: $65,485.80

Excessive Trustee's Fees: 82,848.23

IRS Penalty: 12,000.00

Improperly Incurred Attorneys' Fees: 20,720.00

Portion of Mr. Sundeen's Fees Improperly Caused

By

Errold Moody

's Obstructive Conduct During Litigation:
20,450.00

Punitive Damages: 1.00

Less Amount Paid to Trust by Gonsalves:
(15,000.00)

Total Restitution to the trust:
$191,955.03

The amount to be paid to Mr. Shevick for attorneys fees and
costs is as follows:

Shevick's Attorneys Fees and Costs: 125,899.41

Less Amount paid to Shevick by Gonsalves:
(30,000.00)

Total Restitution to Mr. Shevick: $95,899.41

In addition,

Errold Moody

must return the teak grandfather clock to
successor trustee Ruben Sundeen. If

Errold Moody

does not make a restitution payment of at
least $4,000 within 60 days of his receipt of service of the
executed Judgment in this matter, he shall turn over the
Cadillac, with signed deed for the transfer, to Ruben Sundeen,
trustee.